Mumbai: Cash In Circulation Has Not Declined Despite Rapid Growth In Digital Payments: RBI Deputy Governor Murmu
The ‘Cash Paradox’ makes future demand harder to predict: Shirish Chandra Murmu
MUMBAI: India is facing a challenge of ‘Cash Paradox’ where the currency in circulation continues to grow at double-digit rates even as the cash's share of individual transactions is declining amid growing digital payment adoption, said the Reserve Bank of India (RBI) deputy governor
Shirish Chandra Murmu.
Delivering the keynote address at the Focus Group discussion: Global Cash Management 2026 conference organised by Bank Indonesia in Jakarta, Murmu said that the ‘Cash Paradox’ makes future demand harder to predict, which complicates the central bank’s planning for production and distribution capacity.
He said that despite the rapid growth of digital payments, cash continues to play a critical role in India’s economy, especially in rural and semi-urban regions, among low-income households, senior
citizens and small businesses and preserving trust in cash is central to maintaining monetary sovereignty.
“In the previous decade, adoption of digital payments in India has been revolutionary to say the least, yet cash in circulation has not declined, especially in rural and semi-urban areas, among low-income groups, older populations, and small businesses.”
Murmu said that over the past few years, the RBI has produced between 28 and 30 billion banknotes annually across six denominations, and disposed of roughly 21 billion pieces a year. By comparison, roughly 56 billion US dollar bills and 30-billion-euro banknotes were in circulation at the end of last year. As of today, 176 billion banknotes are in circulation in India.
“One caveat, in fairness to the comparison: our count is driven partly by a denomination mix weighted toward lower-value notes, which naturally means more pieces change hands for the same value of transactions. Even so, the volume gives you a sense of the scale of the logistics we manage every day.”
The second challenge he highlighted was note durability, where the RBI is exploring ways to extend the life of banknotes, including surface coatings on the substrate, and polymer notes for lower denominations.
The third challenge according to him was sustainability. “We are working to reduce the carbon footprint of the cash cycle: optimising our distribution network for efficiency and moving up the value chain in how we dispose of banknote briquettes.”
“If there is one thing I want to leave you with, it is this: cash remains a significant mode of payment in the Indian economy, and preserving trust in it, through clean notes, secure logistics, and a
currency ecosystem people can rely on, is central to preserving monetary sovereignty itself,” said Murmu.
